FBI Establishes “Dedicated International Corruption Squads” to Bust FCPA Violators
The squads will extend the capabilities of the US Department of Justice and the US Securities and Exchange Commission to gather evidence and enforce the Foreign Corrupt Practices Act.
On March 30, the Federal Bureau of Investigations (FBI) announced its establishment of three “dedicated international corruption squads” to investigate violations of the Foreign Corrupt Practices Act (FCPA) and “kleptocracy crimes.” The corruption squads, which will be based in the FBI’s New York City, Los Angeles, and Washington, DC, field offices, are composed of agents, analysts, and other professional staff with “experience investigating white-collar crimes.” Squad members will have access to a broad set of investigatory resources, including “financial analysis, court-authorized wiretaps, undercover operations, [and] informants” and will work closely with the US Department of Justice’s (DOJ’s) Fraud Section, the US Securities and Exchange Commission’s (SEC’s) FCPA Unit, and “overseas law enforcement counterparts.” The FBI’s international partnerships—hailed as “an important part of [its] investigative arsenal”—are “facilitated by [the FBI’s] network of legal attaché offices situated strategically around the world.” The March 30 announcement follows January press reports that the FBI planned to “bulk up [its] foreign bribery efforts” in 2015 by “more than tripl[ing] the number of agents focused on overseas bribery this year to more than 30 from around 10.”
Companies subject to the FCPA can expect to see more aggressive investigative tactics through these increased resources, including cooperation with foreign law enforcement authorities and the use of traditional crime-fighting techniques, such as electronic surveillance. The FBI’s announcement comes on the heels of Spanish-language media reports that law enforcement authorities in Colombia were working with the FBI on a bribery probe of the country’s state-run oil company, Ecopetrol, S.A. Six current and former Ecopetrol executives were arrested in March in connection with the investigation and charged with accepting bribes. One of the charged executives, David Duran, has been named in a closely watched FCPA prosecution in the United States brought against former executives of PetroTiger Ltd., a British Virgin Islands oil and gas company with operations in Colombia and offices in the United States. Two of the former PetroTiger executives—including the former general counsel and one of the former co-CEOs—have pleaded guilty to FCPA conspiracy charges. The other former co-CEO, Joseph Sigelman, has been indicted for FCPA and money laundering crimes but is fighting the charges.
Although the FBI has traditionally reserved wiretaps and undercover agents for investigating organized crime syndicates, it is increasingly using such tactics in the white collar context. Wiretap evidence played a prominent role in several recent insider-trading prosecutions, including the trials of Raj Rajaratnam and Rajat Gupta, and recordings have been praised as an important “real-time” tool “to find and stop ongoing corrupt activity.” In a March 2014 speech, former Acting Assistant Attorney General Mythili Raman warned that “those who are committing acts of foreign bribery right now should be acutely aware that the middleman they are engaging could be an undercover agent [and] that the telephone calls they are making may be being recorded pursuant to a court order.” Raman stated that the DOJ relied on wiretaps, body wires, and surveillance in its investigation of Frederic Cilins, a French citizen who pleaded guilty in March 2014 to obstructing a federal investigation concerning FCPA misconduct. As explained by Raman,
Our commitment to aggressively utilizing all our tools was vividly demonstrated in our prosecution of a French citizen, Frederic Cilins . . . . The evidence against Cilins was, in large part, obtained through the use of a cooperating witness, a wiretap, body wires and surveillance. Cilins was caught on tape by the FBI agreeing to pay substantial sums of money to induce a witness to the bribery scheme to give Cilins documents to destroy that Cilins knew had been requested by the FBI.
In a September 2014 speech, Principal Deputy Assistant Attorney General of the DOJ’s Criminal Division Marshall L. Miller reaffirmed that “proactive investigative tools”—including “wiretaps, body wires and physical surveillance”—have “become a staple in our white collar investigations.”
Undercover surveillance evidence, including a body wire video, will likely be used in the upcoming Sigelman trial. This past January, a federal district court ruled that prosecutors could introduce into evidence secret video recordings that the FBI made of Sigelman with a camera attached to PetroTiger’s former general counsel. The court rejected Sigelman’s argument that the video was subject to attorney-client privilege protections because it could not find any indication that Sigelman had sought, or otherwise received, legal advice.
The FBI’s “dedicated international corruption squads” will extend the capabilities of the DOJ and the SEC to gather evidence and enforce the FCPA. Companies and individuals subject to FCPA enforcement actions should expect to encounter increased cooperation between foreign law enforcement and the FBI and a greater reliance on proactive investigative tools to detect and monitor misconduct.
. Federal Bureau of Investigation, “FBI Establishes International Corruption Squads Targeting Foreign Bribery, Kleptocracy Crimes” (Mar. 30, 2015), available here.
. Joel Schectman, “FBI To Bulk Up Foreign Bribery Efforts,” Wall Street Journal (Jan. 14, 2015), available here.
. See Sabrina Martin, “Colombiana Ecopetrol entregó al FBI sus propios sobornos,” Panam Post (Feb. 12, 2015), available here; “EE.UU. impulsará investigaciones del CTI por sobornos de PetroTiger y Ecopetrol,” RCN La Radio (Mar. 13, 2015), available here.
. Joel Schectman and Sara Schaefer Munoz, “Current, Former Ecopetrol Employees Charged With Bribery in Colombia,” Wall Street Journal (Mar. 13, 2015), available here.
. United States v. Joseph Sigelman, Case No. 1:14-cr-00263-JEI, Dkt. No. 28, Indictment (D.N.J. May 9, 2014), available here.
. Mythili Raman, “Acting Assistant Attorney General Mythili Raman Speaks at the Global Anti-Corruption Compliance Congress,” U.S. Dep’t of Justice (Mar. 20, 2014), available here.
. Id. See also US Dep’t of Justice, Press Release No. 14-783, “French Citizen Sentenced for Obstructing a Criminal Investigation into Alleged Bribes Paid to Win Mining Rights in Guinea” (July 25, 2014), available here.
. Mythili Raman, “Acting Assistant Attorney General Mythili Raman Speaks at the Global Anti-Corruption Compliance Congress,” US Dep’t of Justice (Mar. 20, 2014), available here.
. Marshall L. Miller, “Remarks by Principal Deputy Assistant Attorney General for the Criminal Division Marshall L. Miller at the Global Investigation Review Program,” US Dep’t of Justice (Sept. 17, 2014), available here.
. See Joel Schectman, “Secret Informant Recordings to be Allowed in PetroTiger Case,” Wall Street Journal (Jan. 12, 2015), available here; Kurt Orzeck, “Ex-PetroTiger CEO’s Talk With GC Who Wore Wire Released,” Law360 (Jan. 13, 2015), available here.